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Are There Too Many Staffing Agencies?

Posted By Matt Lowney On November 16, 2011 @ 5:59 am In Opinion | 60 Comments

[1]Staffing agencies struggle to differentiate their brand message and uniqueness in a sea of competition. In my dealings with staffing agencies, their pitches all begin to sound the same, but they also recognize that the sheer volume of competitors makes it difficult to sound different, if they truly are. In most local markets there are a handful of solid players and a larger number of peripheral staffing firms that tend to create the “noise” (read: sales calls). Here are some thoughts on being a top staffing agency player in your market.

Be different. I harked on this point a couple of months ago [2], but I challenge any staffing agency that wants to be great to clearly communicate their compelling business case. Talk about your recruiting process, client relations, local market connections, and client successes.

Don’t be a cheesy sales guy and don’t treat your own recruiters poorly. I know a lot of staffing agency recruiters, and I shy away from vendors that treat their recruiters like dirt (this also drives high turnover and lowers the professionalism bar for all recruiters). Some vendors may say how they run their businesses is none of my business and I should judge them simply on candidates hired. And in response, I will say that how you treat your people speaks volumes about how you are different/better.

Understand your competition and how they do business. As an extension to my previous point, I think staffing firms are so entrenched in the daily operation of their own business that they don’t take the time to understand the competitive landscape. Are your competitors dropping the ball with other clients? What are they doing to build business and break into new accounts you’d like to be in? I think that the typical staffing agency only has a superficial understanding of their competitors and then tries to sell against these perceived weaknesses (for example, I hear “we don’t just send you a bunch of resumes like everyone else” a lot).

For the savvy staffing agency, this in-depth knowledge of the competitive landscape should provide you with worlds of opportunity. The truly great vendors know their competition, know their recruiters, and know their challenges and strengths. This knowledge should provide an agency information on where business development opportunities lie in the market. As a corporate recruiter this information can provide me with much-needed insight into the current talent pool and where my recruiting headaches may soon lie ahead.

Too much business development is done with the “give-us-a-shot” approach. When I wrote my previous article several agency recruiters reached out to me and said, “How will you know that I’m different without giving me a shot at a tough requisition?” While I appreciate their effort, I can’t simultaneously engage a lot of vendors with this request. My world would be consumed with just managing vendors and their candidates.

Here’s a business development suggestion: Go to a client where you’ve had solid success and ask them to either A: Make a call on your behalf (I know that’s a huge stretch but I’ve done it before), OR B: Ask if you can use their name and success story when calling into another company. Strong relationships with clients allow this level of imposition. Lastly, don’t be everything to everybody. One issue I’ve seen with vendors is that they contract with every company in town. In the staffing business I know that means more sales, but it also limits your ability to recruit talent away from my competition.

Maybe there is a need for this many vendors. Ultimately I know the answer to this question is dictated by the market. If there were truly too many staffing agencies, natural selection would weed out those that are less successful. This is an effect we saw during the Great Recession. Some staffing agencies closed up shop while others were able to stay in business and make it through a couple of tumultuous years. However, the handful of excellent staffing firms drown in a sea of mediocrity.

The few solid staffing firms have a reputation built on years of experience, consistency of internal staff, and relationships built with hiring managers and human resources. As a result, a lot of their business development comes when a trusted hiring manager moves to a new company. This person becomes a strong internal champion helping introduce the agency to a new client.

Maybe they are all the same. In consideration of this article’s content, maybe we need to consider this reality — the vast majority of staffing firms are the same. Their sales pitches sound the same and their recruiting approaches are pretty similar, so maybe the best staffing firms simply have the best salespeople.

Perhaps it’s time for staffing firms to admit this reality of sameness and let hiring mangers work with the salespeople they like the most (or take them to coffee the most or get them football tickets, etc). What if success is truly predicated by luck and “dialing for dollars”? If this were the case, then treating vendors as a commodity is the only reasonable course of action (And further reason for the proliferation of vendor management systems).

In closing, I will be the first to state that I don’t know if there are too many staffing firms. At first pass, my opinion seems to be yes. I get way too many solicitation calls for the same service to think otherwise; however, the reality of the market will really bear out whether your local market can absorb new players and will weed out others.


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[2] I harked on this point a couple of months ago: http://www.ere.net/2011/09/21/what-drives-me-nuts-about-staffing-agencies-and-how-they-can-work-as-a-better-partner/

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